(Kitco News) – Gold has taken a back seat to the white metals, and a hawkish turn from the Fed won’t help it in the near term, while silver and platinum are enjoying increased inflows from investors, according to precious metals analysts at Heraeus.
In their latest precious metals update, the analysts noted that while the Fed held steady, the hawkish faction appears to be growing.
“In last week’s meeting of the Federal Open Market Committee (FOMC), US baseline interest rates were held firm at 4.5%, which was in line with expectations,” they wrote. “What is beginning to change, however, is the outlook for the rest of the year. Two camps are beginning to emerge: those in the committee who believe there should be 50 bp of cuts before year-end, and those that see rates staying where they are. The emergence of the latter since the last FOMC meeting helped to strengthen the dollar somewhat. The message from Fed Chairman Powell was that further cuts to interest rates will not begin until the Fed is more confident that Trump’s tariff regime is not significantly contributing to higher inflation.”
“Interest swaps traders are still biased towards a two-cut scenario by December,” they noted. “This would be the most advantageous outcome for the gold price, as two further interest rate cuts would likely result in a weaker dollar, which could support the gold price.”
The analysts said that gold has taken a back seat of late as the white metals gained momentum. “Gold’s one-week performance was the worst of the precious metals to 20 June, falling by 1.64% to $3,370/oz,” they noted. “The price of gold, which had jumped as an initial reaction to the US attacks on Iran, is sending out signs of relaxation.”
Spot gold is setting fresh session highs on Monday afternoon, last trading at $3,391.70 per ounce for a gain of 0.68% on the session.
Turning to silver, Heraeus analysts noted that the gray metal is benefiting from investment demand rotating out of gold.
“In the first five months of the year, silver ETF holdings’ growth was lagging gold, as the yellow metal continued to benefit from safehaven demand and momentum trading as the price continued to rally,” they said. “Since then, however, silver has taken the lead. Holdings of silver in ETFs have grown strongly in June; the first two weeks saw holdings grow by 18.2 moz to 759 moz. Year-to-date inflows total nearly 41 moz, proportionally a much greater growth rate than gold.”
The analysts noted that industrial demand for silver is predicted to decline marginally this year to 677 million ounces as the solar buildout slows. “However, on a historical basis, total demand is still 19% above the 10-year average,” they said.
“For the third week in a row, the silver price reached a higher-high, this time temporarily moving above $37/oz,” Heraeus wrote. “However, by the end of last week, silver had retreated below $36/oz, posting a loss week-on-week of 0.65%.”
At the time of writing, spot silver last traded at $36.199 per ounce and is up 0.53% on the daily chart.
And the rush of investors into platinum is helping to drive the price higher.
“With the gold price stalled around resistance below $3,450/oz, speculators and investors have turned to platinum as an alternative, particularly as the ratio still allows purchases of nearly three times the volume of platinum to gold for the same price,” the analysts wrote. “In the futures market, open interest in platinum futures has grown by 34% to gold’s 2% since the beginning of May. Likewise, ETF holdings of platinum have grown, by 1.17% to 3.22 moz. Global gold ETF holdings have seen only a marginal increase of less than 0.5% over the same period. This indicates that proportionally, platinum is now receiving more attention – largely thanks to its price action – and FOMO trades may be kicking in.”
“So far in June, the platinum price is up more than 20%, and last week surpassed the 2021 high of $1,339.70/oz to reach a more than 10-year high,” they noted. “However, the latest net speculators’ positioning is now showing that long positions are reaching an extreme, which usually coincides with a peak in the price. Therefore, the price may begin to correct shortly.”
Platinum prices are showing no signs of letting up just yet, however. Spot platinum last traded at $1,280.10 per ounce for a gain of 2.05% on the session.
